"The office remains important" – ISG's power of place roundtable

Led by Astrid Eberle of ISG, a panel of workplace experts discussed the findings of ISG's latest research and insight report "The power of place: the consequences of inaction", including Annette Diziol of CMT, Robert Wohlleben of JLL, Andrea Lipp of Workplace-Change and Philipp Tidd of Gensler. 

Core results on the employee side in Germany 

Job satisfaction significantly increases employee productivity. Employees with high-quality workplaces reported higher scores for customer satisfaction (35 percent more agreement) and employee retention 26 percent more agreement) than employees with poor workplaces. In addition, 66 percent of employees surveyed are willing to work in a home office on a permanent basis.  The much prophesied "death of the office" failed to materialize. Demands on equipment and quality of space have changed, but the office remains important. Reasons for working office remain the sense of belonging, the lack of separation between work and private life in the home office, and the fear of social isolation. Respondents see home office as useful for reasons such as cost savings and more sustainable behavior through less commuting, as well as a better work-life balance. 

On the employee side in Germany 

What's more, investments in contemporary offices have a positive impact on company sales, recruiting and productivity, according to the companies' experience. For example, the sales of companies that invested in their space and introduced flex-work increased by 23.5 percent. Allowing flex-work models also meets employee desires, as does investing in contemporary space. For example, 69 percent of companies with investments in the office and hybrid working reported that they had seen an increase in productivity. Many companies have also already drawn conclusions from the lessons learned from the pandemic. In some cases, space has been reallocated to new uses, assigned to new services or made available to other companies. 

Roundtable discussion

To kick off the panel discussion, Astrid Eberle asked participants whether they had experienced companies actually reaping benefits from hybrid work arrangements and improved offices.

Andrea Lipp explained: Here, the focus is always quickly on the technical infrastructure and the space, but not yet so much on the managers. In my opinion, they should be trained more with hybrid working in mind, because the expectation of managers has clearly changed. If you go to your boss today, you expect the boss to be proficient in tools like teams, etc. More needs to happen there.

Andreas Tidd added: We are still in a transition phase out of the pandemic and don't know exactly where we are going in the post-pandemic world. For 30 years, the real estate industry put a lot of emphasis on building space efficiency in its metrics. People have looked at what the occupancy rate is or how many people are sitting at their desks at one time and how long that's the case. We think those kinds of metrics are a phase-out, globally. It's more about what people do, not where they do it.

Robert Wohlleben: Traditional industries with individual offices are now also looking for hybrid working options when new space is sought. We observed this when we assisted a law firm in moving to new premises. Hybrid working was also to be introduced there. Which was a challenge, as the office is definitely a status symbol in the industry. For example, they booked 65 seats for 90 employees – this initially led to discussions but was easily absorbed thanks to change management. Hybrid working didn't contribute to more space efficiency, because other spaces were used for break-out rooms for employees to position themselves as an employer brand.

Andrea Lipp: Employees need to be guided in their expectations during a change like this. Leadership needs to provide a vision of the work culture. It should be made clear: 'We want to do a lot to make you all feel good, but we're still not playing a wish concert here.' This must be coupled with a clear strategy from the leadership so that the right people can be brought in and work can be done successfully. The leadership must formulate its goals, which are not at the expense of the employees, but still have the focus on working successfully. Clear communication can help determine the success of measures in change management.

Astrid Eberle: How does social work in hybrid models? Can the design of the office contribute something to this?

Anette Diziol: We brought our colleagues together with morning meetings and greetings via MS Teams. However, the joy of coming into the office was different. People come to the office to socialize, to experience something they don't experience at home. The fit-out and the social in the office need to benefit from each other and fit together – difficult, but that's definitely where we need to go. When it comes to design, we all need to pull together. The commonality is hugely important to end up with what's best for the project.

Tidd: In the meantime, we have adapted to remote work worldwide - but we still need social contacts and therefore the office remains important. Modern designed spaces are important for that. But it's not about just providing infrastructure, it's about creating events and gatherings that draw employees into the office and create a sense of community. But we also need to create a good balance: Before the pandemic, we often had meetings that many didn't see as meaningful, that they were happy to see go away. So it also needs the cultural change.

Lipp: Design can also play an important role here, for example, in color choices, or the volume in the office. These have a subconscious effect on well-being.

Eberle: Has design actually been used to achieve such effects? 

Tidd: Design is definitely used to achieve an effect on employees. We have also conducted research on this. We react much more positively to buildings with lively spaces that have plants, for example, and an appealing design (keyword: color). 

Eberle: Have you noticed that companies have increasingly remodeled and redesigned offices in the last two years?

Diziol: In the case of private office owners, we have seen that there was more of a willingness to establish hybrid working there, compared to public clients. The calculation here is quite simple. If I don't position myself attractively for potential employees, the applicants will stay away or employees will leave. The public sector doesn't have this pressure, there is less fluctuation and they have had more time to adapt. They have caught up incredibly well.

Eberle: How can companies be convinced of new work models?

Wohlleben: They are convinced when colleagues move to other companies with more attractive spaces, an open mindset and modern conditions for work models. Young workers fresh out of university naturally look very closely at where the conditions are best. In government agencies, there is definitely the will from the top to initiate change, but individual employees are reluctant to do so for various reasons, for example because they are not comfortable with new technologies and are afraid of contact. We see something similar in long-established family businesses.

Diziol adds: The management has to be prepared to accept this. Otherwise, I'm slowing down the change. So I also have to be willing to work on myself.

Lipp: Customers can have an impact here. They can ask: Is the employer really not keeping up with the times – is this still the right service provider for us? Companies should invest first and foremost in their employees, are the most important values. They should also be treated as such. If employees are left alone, whether in the home office or in the office, they fare badly. This is shown by surveys conducted by health insurance companies, keyword mental health. I would say that managers have to work very hard on themselves in such a change in order to make this change possible for employees.

Tidd: A lot has to do with leadership and management style. The focus should be on the main customer: your own employees. We've seen that everyone wants to work in a hybrid world. But that's not yet more defined. Every region in the world has a different approach to remote working, but most want to work in a hybrid system. It's no coincidence that one of the most important questions in a company's mission statement is about their working model. Questions about ESG mission statements are also playing an increasingly important role here.

Eberle: I also think that sustainability and cost awareness among employees has increased and therefore plays a role, how do you see that?

Wohlleben: I haven't noticed that in that sense, at least as far as commuting is concerned. A crucial question here is the development of energy prices. How expensive is it to heat my own home, how much does electricity cost? Otherwise, that's certainly true. We currently still have a company car fleet also offer ebikes, company cars we are currently converting to hybrid models.

Eberle: Company cars as a status are on the way back, especially younger people don't need and don't want this anymore, especially in metropolitan areas. Sustainability awareness is more important here. Also because of urban planning.

Tidd: What Germany is doing very well in terms of ESG here: In big cities, for example in the U.S.: The cities are very expensive, I can work here but I don't want to live here. In Germany, the benchmark here is the 15-minute city, where you can reach everything well in a short time by bike. For me, Munich, for example, is a 15-minute city, as are smaller cities in Germany.

Diziol adds: We also see that our underground parking spaces are constantly empty, which is also an indication.

Summary

In conclusion, we can say that the office will remain important in the future. The decisive factor for the future will be that the premises are equipped with the latest technology, ergonomic work utensils and an attractive design. This will help retain employees longer and increase sales. More flex work, on the other hand, will not necessarily lead to less space being used; rather, this space should be used to offer new services or to increase the quality of stay.

In the same way, hybrid working will remain part of the working world. Companies must establish the right mindset for this, including in management, and at the same time implement the necessary infrastructure in their premises.

Watch the full recording below: